The sliding euro: Heading for parity

A tumbling currency reflects Europe’s dismal prospects; it is a second-best route to curing them

THIS week marked a milestone in the history of Europe’s single currency. On January 14th the value of the euro slipped to $1.17, the rate at which it was introduced on January 1st 1999. Back then, the fledgling currency weakened fast, hitting parity with the dollar in early 2000 and plunging to $0.83 by October of the same year. The slump in the euro’s value suited no one: the European Central Bank (ECB) worried about inflation from rising import prices; other countries fretted about declining competitiveness. So the world’s big central banks undertook a programme of co-ordinated intervention to stem the euro’s fall.
This time round the euro’s slide has been more gradual, but it is likely to prove more persistent. Parity with the dollar is quite plausible this year. Both politics and economics are undermining the currency.